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    Nintendo shares plunge after 3DS price cut

    TOKYO (AP) โ€” Shares of Nintendo Co. took a beating Friday, losing more than a fifth of their value at one point, after the Japanese video game giant announced a worldwide price cut for its new 3DS in an effort to salvage poor sales.

    The move spooked investors and analysts, who had expected a quarterly loss but were taken aback by the severity of Nintendo's woes.

    The stock fell more than 20 percent in the morning but pared losses in the afternoon. It closed down 12.2 percent at 12,290 yen.

    Nintendo on Thursday posted a net loss of 25.5 billion yen ($324 million) in the April-June period, almost on par with its loss a year earlier. Sales during the quarter slumped more than 50 percent.

    The numbers forced Nintendo to slash its profit forecast for the full fiscal year through March by more than 80 percent.

    The Kyoto-based company blamed its lackluster performance on a dearth of hit titles for the Wii and 3DS handheld device, as well as a strong yen. Analysts say Nintendo's problems run deeper.

    The 3DS got off to a solid start when it launched in February to high hopes. But it has fizzled since then. The company moved just 710,000 units in the latest quarter, compared with 3.61 million in its debut quarter. Sales of the regular DS and Wii also fell sharply.

    To fuel momentum, Nintendo decided it needed to cut prices just five months after it launched the 3-D version of its popular DS.

    The device will cost 15,000 yen in Japan starting Aug. 11, down from 25,000 yen. In the U.S., the price drops to $169.99 from $249.99 on Aug. 12.

    JPMorgan immediately downgraded its rating on Nintendo shares to "Underweight."

    "The launch of the new 3DS has stalled and the hardware price cut so early into release is an unprecedented act, highlighting that management's confidence in their contents is not enough to push through into Christmas 2011," said JPMorgan analyst Hiroshi Kamide in his report.

    It took almost three years for the company to lower the price on the best-selling Wii for the first time, and that was by $50.

    Nintendo's recent missteps underscore the Kyoto-based company's struggles in adapting to a gaming market that has evolved since the Wii revolutionized the gaming industry when it launched five years ago.

    The Wii, with its motion-sensing controls, expanded gaming to casual users and even non-gamers like seniors. The console flew off shelves, and Nintendo's biggest problem at the time was keeping up with demand.

    Now it must contend with the rise of smartphones and social networks, which have lured millions of casual gamers around the world and spawned smash hits such as Rovio Mobile's "Angry Birds."

    So far, Nintendo doesn't seem to have a good answer.

    Nomura Securities also cut its rating on Nintendo's stock one notch to "Neutral." Analyst Yuta Sakurai asks, "Has Nintendo lost its way?"

    He commends the price cut as a bold decision that is likely to boost sales. But it will hit earnings hard. And even if Nintendo's next major launch โ€” the Wii U โ€” goes smoothly, the company's profits are unlikely to reach anywhere near the levels during the Wii's peak, he said.

    "We think Nintendo will have to radically change its tactics if it is to once again increase the size of the gaming population," Sakurai's report said.

    ___

    Follow Tomoko A. Hosaka at http://twitter.com/tomokohosaka

     

    20 comments

    • A Yahoo! User  •  10 mths ago
      The platform isn't the problem... it's the lack of development. No games means no sales.
    • S W  •  10 mths ago
      Seen one at the Best Buy and just looking at it for a few second threw me into Motion sickness. That's way I won't be buying one.
      • E R 9 mths ago
        I totally agree on this one..I could feel some headache after looking at the console for a few minutes.. no thanks, I'm not buying one for my kids.
    • Stormy  •  10 mths ago
      Dear Nintendo; by capitalizing on new markets, and generating interests for your system even among non gamers, you enjoyed unparalled success. Now, if you wish to regain that position you need to do something similiar; capitalize on a new market. The one I would reccomend is the one that launched your campany, one that has been overlooked by all other current gen game makers. The original gamers. Those of us near to mid-life who grew up with mario and donkey kong, who miss the days of 2-d glory, one hit kills, bottomless pits, genuine challenge, a focus on quality rather than quality, on game design rather than graphic design. Make a new 2-d mario game without the abusive (and non-mario) wall jump, group play, over-powered/silly power-ups, hand holding, infinite do-overs, and make it HARD (if you forgot how to do that I will design some levels for you). Then do the same thing for donkey kong country (and no cotrols that require psuedo fapping). If that alone does not save your market value, and new systems, I will personally buy and eat a wii, or 3ds, your choice.
      • Stormy 10 mths ago
        Correction; "quality rather than quantity"
      • Mike I 10 mths ago
        i agree with you. have been thinking that for a long time. 3d is fine, everyone that grew with NES and up, can still enjoy a 2 d game.
    • HowieMandel  •  10 mths ago
      Honestly, i cant see the 3d in nintendos 3ds. I think thats the basic problem. Thats the reason i didnt buy one for my daughter.
    • Bernie -  •  10 mths ago
      the platform IS the problem. handheld has reach it's evolutionary end-road.

      gamers have moved onto something less cumbersome, less over-priced, more feature-rich and value-add.
    • Danny  •  10 mths ago
      Bad timing on Nintendo's part. With the ecomomy down ppl aren't too keen to drop $250 on what is basically a DS with some eye candy. I know I told my son that getting one was a big NO. He'll just have to make due with his DSi, Wii, PS3, and computer. I think he'll survive.
      • Estip 10 mths ago
        Get him a gaming PC. PC games tend to make u use your brain more and the eye candy is unmatched by console games.
    • A Yahoo! User  •  10 mths ago
      People have more important things to spend their money on (food, clothing, rent, mortgages, gas/utility bills, etc.) than overpriced toys.
    • Terri  •  10 mths ago
      They needed a strong opening line-up and they didn't have one. Nintendogs? Zelda, Ocarina of Time (and old game with a face-lift)? These are nice, but they are not system sellers. It all comes down to the games.
    • John  •  10 mths ago
      Too bad Nintendo. You had everyone by the nuts when your wii came out. Jacked up prices, phony shortages. I guess Karma really is a b i t c h.
    • Bass Man  •  10 mths ago
      Nintendo is in panic mode because the 3DS isn't selling as well as forecasted and has been abandoned by Amazon and other retailers due to customer complaints about the headaches, eyestrain and shoddy quality, the Wii sales have dropped to virtually nothing and the Wii U is at least a year away from debut. Seriously...have you EVER seen a console or handheld drop in price almost $100 in less than a year of launch? Panic, Panic, Panic.
      • TTouchdown 10 mths ago
        "have you EVER seen a console or handheld drop in price almost $100 in less than a year of launch?"
        PS3 I believe.
        "abandoned by Amazon and other retailers due to customer complaints about the headaches, eyestrain and shoddy quality"
        Fud.
        "Wii sales have dropped to virtually nothing "
        Way down from its heyday, it's now it selling at PS3 levels. That's nothing? You're terrible at this.
      • What!!! 10 mths ago
        Dude you seriously need to do you research because you do suck at this considering amazon is still selling the system and is offering pre sales at the lower price
    • JiL  •  10 mths ago
      The product is a bust. I wouldn't buy it because of the eyestrain.
      • E R 9 mths ago
        Exactly, people won't be enjoying the game for what it was made of if they are giving them vision sickness.
    • web/gadget guru  •  10 mths ago
      You want to know why the 3DS is failing? There is no way to reliably hack the device. Back in the DS and DSlite days, you could purchase any of a number of cartridge hack devices and load them up with dozens of *FREE* NDS games and play to your heart's content. These devices utilized an image rendering flaw in the DS software that gave root to the device. Now with the 3DS, Nintendo closed that flaw and nobody can hack the devices anymore. When I was in Hong Kong several years ago, *EVERYBODY* used a DSLite while commuting. And they all had the hack cartridges which were being sold on the street for $20! I somehow doubt this is the case anymore! Nintendo shot themselves in the foot by stopping pirating!
    • Meg  •  10 mths ago
      Tried it in the store and the image was too blurry. Not worth the eye pain.
    • Bruce W  •  10 mths ago
      Nintendo is too kiddie oriented. They need to have older more mature games for the gamers as they age.
    • Roger  •  10 mths ago
      no one will buy their consoles anymore. not with all of the smartphones and tablets kicking their a s s. nintendo needs to do the smart thing now. exit the hardware side of the business and concentrate on pushing their software titles on hardware devices that people actually want. just like sega did long ago. nintendo had a great run. especially recently with the wii and ds. but it is over now. time to move on. the writing has been on the wall for years.
    • Josh  •  10 mths ago
      This is what happens when you don't have but three [example in number only] decent games when you debut a new system, however similar it may be to its prior...not enough games that make a big difference to its system is bound to fail it - especially when its own first party games have nothing strong for at least 6 months...Sorry Nintendo, I love you but I gotta call this one a "fail."
    • Stephen  •  10 mths ago
      Serves them right for making kiddie crap and underpowered systems all those years.
    • Bryan  •  10 mths ago
      nintendo should go back to making video games that the core gaming demographic actually wants to play. the casual gaming market is fickle and easily distracted by whatever wastes the most time the easiest. it was profitable while it lasted, but it's stupid to base one's entire profit earnings on the sort of people who will spend hours playing the digital equivalent ofl tic tac toe. nintendo pledged that they were not interested in making such popcorn games at e3 - it's time to put their money where their mouth is now that the casual market has moved on to smartphones and pads.
    • Frank  •  10 mths ago
      Nintendo should release exclusive games on smart phone
    • Alex  •  10 mths ago
      Death to Nintendo as a console maker. Here's hoping they start making games for Microsoft and Sony soon.
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